New York Markets After Hours

Existing-home sales slowest in more than a year

WASHINGTON (MarketWatch) — The pace of existing-homes sales dropped in January to the slowest rate in more than a year, starting 2014 with a whimper, according to data released Friday.

Sales of existing homes fell 5.1% in January to a seasonally adjusted annual rate of 4.62 million, the slowest pace since July 2012, the National Association of Realtors reported Friday. Sales have trended down since the summer, hit by declining affordability and low inventory. Unusually poor weather may have also a played a role in January’s drop, NAR said.

Sales dropped across the U.S., with the rate down 7.3% in the West, 7.1% in the Midwest, 3.5% in the South and 3.1% in the Northeast.

On top of declining affordability, job growth has been slow recently, there are new mortgage rules for would-be buyers and lenders, and lending standard remain relatively high. Clouding the home-sale picture is poor weather, which makes it difficult to clearly identify trends that underlie the monthly volatility and recent sputtering in the housing market.

Friday’s home-sales data follow reports earlier this week that pointed to a slowdown for the housing market’s recovery. The government reported that construction on new U.S. homes tumbled 16% in January to the slowest rate since September.

The weak construction reading was dark enough for economists to lower their forecasts for U.S. economic growth this quarter. A separate report on home builders showed that they grew pessimistic this month, concerned about sales of single-family homes.

But looking forward, there may be better news in coming months: Residential projects and purchases delayed during a particularly tough winter could show up in the spring. And there are positive factors that could support sales this year. Some banks are making it easier to obtain a mortgage, hungry for the mortgage revenue that they lost when refinancing applications plunged last year. Also, pent-up demand remains high even as housing inventory remains low. And the pipeline of foreclosures is dropping.

“I suspect that housing demand is in fact being dampened by winter weather for now and will thus rebound in the spring, but the unusually sharp gains in sales and prices seen last year may not be replicated, even as construction activity (to alleviate the tightness of new home inventories) rises robustly again,” said Stephen Stanley, an economist at Pierpont Securities.

Also Friday, NAR reported that the median sales price of used homes hit $188,900 in January, up 10.7% from the year-earlier period, supported by low inventory. January’s inventory was 1.9 million existing homes for sale, a 4.9-month supply at the current sales pace.

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